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After the establishment of the constitution, the Federalist administrations faces many significant challenges when dealing with the economics of the United States; much of the country was divided over issues such as how to raise money, establishing a public credit system, how to pay the national debt, and whether or not a national bank should be established. Leaders like Alexander Hamilton, Thomas Jefferson, and James Madison came to represent the ideas of the people and as these ideas became more solid, debate and opposition rose. The Federalists saw multiple ways to resolve these issues, and the resolutions established that leadership in the United States would be successful.
Raising revenue for the United States was the first economic issue the Federalists faced. This was the first and most important need they saw for the country. At first, James Madison proposed a small tax on imports, however, the high demand for money quickly increased the taxation. Also, the Tonnage Act of 1789 was passed, taxing American and foreign ships. American ships were not taxed as much as foreign ships, however. The issues of taxation and raising money also brought into play bigger issues, such as whether the United States should favor Britain or France in their economic policies, whether they should maintain taxation even at the expense of farmers, and whether the interests of northern manufacturers should be their biggest concern. The Tonnage Act was the beginning of increased revenue in the America, but a sound fiscal discipline was far from having been created.
Another issue that was controversial was the establishment of a public credit system and paying the national debt. Alexander Hamilton was the main activist in this issue. He wrote several reports to the House of Representatives offering solutions to the problem. In his first report, he suggested that citizens who had government bonds should be able to turn them in for new, interest-bearing bond. He also thought that the government should make the states pay their debt to the government, which would be about $21 million. The problem with his ideas was that, in financial crisis, many farmers had sold their bonds at very low prices to speculators, and that with this plan, only the speculators would benefit, because they could trade in all of the bonds they bought very cheaply. The citizens argued that the they should be they should be paid back for their losses.
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